Saturday, September 24, 2011

Pakistan Tops South Asia Jobs Growth 2000-2010

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".



Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.



The report says that nearly a third of workers in India and a fifth of workers in Bangladesh and Pakistan are casual laborers. Regular wage and salaried workers represent a fifth or less of total employment.

Analysis of the labor productivity data indicates that growth in TFP (total factor productivity) made a larger relative contribution to the growth of aggregate labor productivity in South Asia during 1980–2008 than did physical and human capital accumulation. In fact, the contribution of TFP growth was higher than in the high‐performing East Asian economies excluding China.



India's labor productivity growth since 1980 has been the highest in South Asia, followed by Sri Lanka and Pakistan. This was particularly the case in India where TFP rose by 2.6% versus 1.4% in Pakistan during this period.

The report argues that South Asia region needs to create a million jobs a month just to keep up with the growth of the workforce. In addition to corruption, conflicts and political instability, the report specifically mentions electricity shortage as a key factor inhibiting job growth in the region. Power sector financial losses across the region are large, resulting from the misalignment of tariffs, the high cost of power procurement, and high transmission and distribution losses. In India the combined cash loss of state-owned distribution companies is more than $20 billion a year, compared with $300 billion of investment needs in 2010–15. The sector deficit in Pakistan is estimated at about $2 billion a year, compared with $32 billion of investment needs in 2010–20.

Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.

It's important for Pakistani government to seriously address the energy and security crises to restore investor confidence and bring back the strong economic growth necessary for creating millions of jobs for its growing youth population entering the workforce. The consequences of inaction on this front would be far more disastrous than the negative effects of the current Taliban insurgency.

Related Links:

Haq's Musings

More and Better Jobs in South Asia

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

Pakistan Planning Commission

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

India Pakistan Contrasted 2010

Pakistan's Foreign Visitors Pleasantly Surprised

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

BSE-Key Statistics

Pakistan's Multi-Billion Dollar IT Industry

India-Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

IMF-Pakistan Memorandum of Economic and Financial Policies

10 comments:

Riaz Haq said...

Stock and credit markets respond positively to rate cut by Pak central bank, according to The Express Tribune:

KARACHI: The bond and equity markets have reacted strongly to central bank’s surprise decision of slashing the interest rate to bring it on a par with pre-2008 crisis levels.

Karachi inter-bank offered rate (Kibor), the benchmark six-month lending rate, plummeted 95 basis points in a single day to a 26-month low of 11.96%, according to a Topline Securities research note.

Furthermore, yields of the actively traded one-year treasury bills and the benchmark 10-year Pakistan Investment Bonds fell by 75 basis points and 60 basis points to trade around 11.90-93% and 12.00-05%, respectively.

The State Bank of Pakistan (SBP) on Saturday cut its benchmark discount rate from 13.5% to 12%.

The rate cut has also benefitted well the stock market on account of better earnings for leveraged companies and reduction in risk-free rate, adds the note.

The Karachi Stock Exchange’s benchmark 100-share index opened with a gap of approximately 350 points to skip over 12,000 points for the first time in two months on Monday.

Profits of leveraged companies to jump 2-8%

Heavily leveraged companies from the cement, textile and fertiliser sectors – whose loans are floating and linked with Kibor – will have to bear lower interest charges from January 2012 following quarterly loan re-pricing in December, says the note.

These companies will be the major beneficiaries of the cut in discount rate, the fee commercial banks pay to borrow money from the SBP. DG Khan Cement, Engro and Pakistan State Oil will be some of the major gainers as their annualised earnings will increase by 7.8%, 6.5% and 2.1%, respectively, adds the research note.

Overall, the rate cut will augment earnings growth by 0.5% in 2012.


http://tribune.com.pk/story/271244/chain-reaction-surprise-rate-cut-takes-kibor-to-26-month-low/

Riaz Haq said...

Here's a Dawn report on Pakistan's progress in human development since 1980:

ISLAMABAD: Pakistan has been ranked 10th among the countries in term of human development improvement by the United Nations Development Programme’s 20th Human Development Report 2010.

Those among the 135 countries that improved most in Human Development Index (HDI) terms over the past 30 years were led by Oman, which invested energy earnings over the decades in education and public health.

The other nine “Top Movers” are China, Nepal, Indonesia, Saudi Arabia, Laos, Tunisia, South Korea, Algeria and Morocco. Remarkably, China was the only country that made the “Top 10” list due solely to income performance; the main drivers of HDI achievement were in health and education.

The UNDP report said that in Pakistan, between 1980 and 2010, the HDI value increased by 58 per cent (average annual increase of about 1.5 per cent).

“With such an increase Pakistan is ranked 10 in terms of HDI improvement, which measures progress in comparison to the average progress of countries with a similar initial HDI level”, it added.

Pakistan’s life expectancy at birth increased by more than nine years, mean years of schooling increased by about nine years and expected years of schooling increased by almost 4 years.

Pakistan’s Gross National Income (GNI) per capita increased by 92 per cent during the same period. The relative to other countries in the region, in 1980, Pakistan, India and Bangladesh had close HDI values for countries in South Asia.

However, during the period between 1980 and 2010 the three countries experienced different degrees of progress toward increasing their HDIs states the Report.

The Report introduces the Multidimensional Poverty Index (MPI), which identifies multiple deprivations in the same households in education, health and standard of living.

The average percentage of deprivation experienced by people in multidimensional poverty is 54 per cent.

The MPI, which is the share of the population that is multi-dimensionally poor, adjusted by the intensity of the deprivations, is 0.275.Pakistan’s “HDI neighbors”, India and Bangladesh, have MPIs of 0.296 and 0.291, respectively.


http://www.dawn.com/2011/02/27/pakistan-among-top-10-nations-in-human-development-improvement.html

Riaz Haq said...

Here's a BR story on State Bank governor encouraging Pak banks to finance SMEs:

KARACHI: Governor, State Bank of Pakistan, Yaseen Anwar has stressed upon the banks to give top most priority to SME banking with a view to ensuring uninterrupted flow of financial access to SME sector in the country.

Speaking at the signing ceremony of the project document between the State Bank of Pakistan (SBP) and Bank Alfalah under the DFID-funded Financial Inclusion Programme (FIP) at SBP, here Monday, he said the role of banks, especially of mid-tier banks, is crucial to ensure unhindered flow of financial resources to the SME sector which is the engine of economic growth in Pakistan.

"Though many banks in the market are trying to improve their market position in order to serve the sector more effectively, the current level of SME finance as well as an overall level of SMEs access to banking services remain unsatisfactory, and as such call for more serious efforts on part of the banks", SBP Governor added.

Anwar said that SME financing is very close to his heart due to its key significant contribution in the economic development of Pakistan. "The SME sector plays an important role in employment generation, poverty alleviation, and equitable distribution of resources and is the engine of growth", he added.

He pointed out there are 3.2 million economic establishments, of which 99% are SMEs, and SME sector represents over 90% of all enterprises and employs 75% of the non-agricultural workforce and contributes 30% towards the national GDP.

"However, despite its strong contribution in employment generation, exports, and national income, the SME sector is severely constrained in access to finance which is crucial for its growth", he added.

SBP Governor advised the banks to study the international examples of successful SME banking models which include Retail-based Model for Mass SME, Relationship-based banking, Advisory-based lending services, Segment-based Model, and Supply-chain linked Model.

Regrettably, he said that despite its immense significance and potential, the SME sector in Pakistan remains largely financially excluded, the current level of financing facilities to this sector stand at Rs 253 billion, constituting only 7% of the banks' total advances.

Anwar said that with the SBP- Bank Alfalah and International Finance Corporation (IFC) nexus, and the generosity of DFID, we can have more joint ventures of this sort in the future that would lead to a sustainable, sound and integrated financial system, characterised with ready access to finance, diversified loan portfolio and extended outreach to SMEs.

He said the State Bank, under the DFID-funded "Financial Inclusion Programme (FIP) will provide funding support to Bank Alfalah (BAF) in undertaking the IFC SME Advisory Project. "The main objective of the project is to create a symbolic podium which can position Bank Alafalah to cater to the financing needs of the SME sector including the S and M segments through a holistic banking and advisory services solution", he added.

SBP Governor said the SMEs need to be addressed through innovative credit assessment tools and techniques like credit scoring and capacity enhancement of the financial service providers, and an integrated approach to SME Banking. DFID and SBP are keen to upscale FIP to reach out the unbanked segments in Pakistan. Going forward, FIP funds will also be targeted to improve financial inclusion through SMEs banking, Anwar added....


http://www.brecorder.com/pakistan/banking-a-finance/61658-sbp-governor-asks-banks-to-give-top-priority-to-sme-banking-.html

abhishek chaturvedi said...

mr riaz.. i am an indian and wish poverty gets eleminated from south asia as soon as possible so that south asia becomes most stable and wealthy region of the world.. may god bless us all

HopeWins Junior said...

^^RH: "The report argues that South Asia region needs to create a million jobs a month just to keep up with the growth of the workforce."
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This is silly. 12 million jobs a year is too low given South-Asian demographics.

Indian Government is reporting jobs needed as 20 million a year for next ten years.

GOP is reporting jobs needed at 2.5 million a year for next ten years.

Bangladesh is is reporting jobs needed as 2.5 million a year for next ten years.

So I would say that "South Asia" needs at least 25-26 million jobs per year over next 10 years in order to prevent the formation of a "lost generation of youths".

Riaz Haq said...

Here's an Express Tribune report on youth business loans in Pakistan:

With his new financing scheme for the youth, Prime Minister Nawaz Sharif on Saturday unveiled a plan to enable budding entrepreneurs to run their business ventures.
The Youth Business Loans initiative is the government’s delivery of a promise made during the election campaign. “During the election campaign, I witnessed the vigour and enthusiasm that the youth showed, and promised that if voted to power, the PML-N would empower the youth of Pakistan so they can contribute effectively towards the development of the country,” he said at the launch of the scheme.
The chairperson of the prime minister’s Youth Business Loans scheme, Maryam Nawaz, said the aim was to convert young ‘dependents’ into ‘providers’.
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The scheme is designed to provide subsidised financing at eight percent mark-up per annum for 100,000 beneficiaries through National Bank of Pakistan and First Women Bank.
The total mark up rate would be 15 per cent but the government would pay the remaining seven percent on behalf of the applicants.
Those falling in the age group of 21 and 45 years are eligible to apply for loans from Rs100,000 to Rs2,000,000.
Small business loans with a tenure of up to seven years plus one-year grace period and a debt-equity ratio of 90:10 will be disbursed across the country including Gilgit-Baltistan‚ Azad Jammu and Kashmir and the Federally Administered Tribal Areas.
Youth will have an eight-year payback period with the first year as a grace period for repayment.


http://tribune.com.pk/story/642764/pm-business-loans-scheme-govt-launches-initiative-to-empower-youth/

Riaz Haq said...

From VOA report:

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed.

On a good day, Jamil Hassan will have some 15 customers, and earn an average of $8 a day.

Hassan is one of the millions working in Pakistan's informal economy, the mainstay for the country's vast poor. He never went to school. Cutting hair is all he knows.

"I've been doing this all my life," he said. "My father and grandfather did it before me, so this is what I do."

About 40 percent of all workers in Pakistan have no education. Hassan says illiterate people like him will never make enough to be able to save money.

Economist Ali Kamal says the informal economy can be seen as helping the country's overall economy.

"It absorbs a labor who is otherwise unemployed, it provides services at a cheaper cost and cheaper price to the general public, and it complements the formal sector," he said.

Mohammad Naeem works in a modest seasonal wheat mill, when Pakistan's constant power cuts don't grind work to a halt. Naeem says he would like to have his own business. But he doesn't believe in bank loans or in savings.

"I feel that people should not take loans, not owe money," he said. "That is very important. You should only use what you earn."

Kamal says millions of workers like Naeem and Hassan don't pay taxes, meaning less money for an already cash-strapped state.

"If we collect sales tax from all those informal sectors, it may account for four to five percent of GDP, and if we collect four to five percent GDP in sales tax from those informal activities, then we don't have any budget deficit anymore," he said.

But as of now, the informal sector is providing cheaper goods, services and labor to the formal sector. Analysts say Pakistan would have to reform its entire economic structure to change the situation


http://m.voanews.com/a/millions-labor-in-pakistans-informal-economy/1894009.html

Riaz Haq said...

They’re (jobs) being obliterated by technology.

Check out your groceries or drugstore purchases using a kiosk? A worker behind a cash register used to do that.

Buy clothes without visiting a store? You’ve taken work from a salesman.

Book your vacation using an online program? You’ve helped lay off a travel agent — perhaps one at American Express Co., which announced this month that it plans to cut 5,400 jobs, mainly in its travel business, as more of its customers shift to online portals to plan trips.

Software is picking out worrisome blots in medical scans, running trains without conductors, analyzing Twitter traffic to tell where to sell certain snacks, sifting through documents for evidence in court cases, recording power usage beamed from digital utility meters at millions of homes, and sorting returned library books.

Year after year, the software that runs computers and an array of other devices becomes more capable of doing tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.

‘’I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years,” says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of “Race Against the Machine.”

The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they’re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are disappearing.

“There’s no sector of the economy that’s going to get a pass,” says Martin Ford, who runs a software company and wrote “The Lights in the Tunnel,” a book predicting widespread job losses. “It’s everywhere.”

The numbers startle even labor economists. In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are midpay. Nearly 70 percent are low-paying jobs; 29 percent pay well.

In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers. But, overall, technology is eliminating far more jobs than it is creating.

To better understand the impact of technology on jobs, The Associated Press analyzed employment data from 20 countries; and interviewed economists, technology experts, robot manufacturers, software developers, CEOs, and workers who are competing with smarter machines.

The AP’s key findings:

■ Over the past 50 years, technology has drastically reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy.

■ Technology is being adopted by every kind of organization that employs people — in large corporations and small businesses, established companies and startups, schools, hospitals, nonprofits and the military.


http://jacksonville.com/news/national/2013-01-28/story/ap-investigation-technology-killing-millions-middle-class-jobs

Riaz Haq said...

Unfortunately, cross-country analysis of the connections between manufacturing employment and levels of development has been restricted to OECD countries. This matters because many developing country governments have large programs to stimulate manufacturing activity, on the understanding that jobs and higher incomes will follow.


Ambitious job targets are announced - such as 100 million new manufacturing jobs by 2022 in India. These are typically justified with reference to the experiences of earlier industrializers, like Korea and Taiwan. Public budgets, land and labor regulations, and even education policy are being modified to pursue these manufacturing jobs. We can see why developing countries want these manufacturing jobs: our data show that a country’s peak manufacturing employment share between 1970 and 2010 rather than is its peak manufacturing output share, is a much better predictor of its average per capita GDP in 2005-2010. Controlling for peak manufacturing employment shares and the date that manufacturing activity peaked, peak output shares are insignificant predictors of subsequent prosperity. This suggests that manufacturing output matters for prosperity only insofar as it comes with jobs. Moreover, we show that every country that is rich today, by any reasonable standard, had more than an 18-20% manufacturing employment share sometime since 1970.


It is important to note that industrial activity typically grows with income in poorer countries, peaks, and then falls with income and wages in richer (deindustrializing) countries. There are two reasons we think that manufacturing employment-led development is becoming more challenging.

Labor productivity has risen faster in manufacturing than in the wider economy. Higher levels of manufacturing output are now compatible with lower levels of manufacturing employment.

Manufacturing activity is now more apt to leave for other countries as labor costs rise. Therefore deindustrialization kicks in at lower income levels. Moreover, this premature deindustrialization is more apparent in employment than in output data. Output can be sustained in the face of rising labor costs by replacing workers with machinery. (Arvind Subramaniam and Amrit Amirapu show similar trends in industrial (manufacturing plus mining, utilities and construction) employment using repeated cross-sections of countries.)
Countries still industrialize and then deindustrialize as they become richer. However, industrial employment shares for today’s late industrializers such as China, India and Bangladesh are all below 16%, and on today’s trends seem unlikely to rise much further. Moreover, the per capita income levels at which deindustrialization kicks in have fallen from $34,000 in 1970 to around $9,000 in 2010.

These results urge a balanced approach to industrialization. They confirm that industrialization matters – when it brings jobs; but they also confirm that this is less and less likely to happen. Governments must not neglect manufacturing. Nor can they rely as heavily on it as they once did.


http://blogs.worldbank.org/jobs/manufacturing-conundrum

Riaz Haq said...

From The Economist Mag: A robotic sewing machine could throw garment workers in low-cost countries out of a job


HUMAN hands are extremely good at making clothes. While many manufacturing processes have been automated, stitching together garments remains a job for millions of people around the world. As with most labour-intensive tasks, much of the work has migrated to low-wage countries, especially in Asia. Factory conditions can be gruelling. As nations develop and wages rise, the trade moves on to the next cheapest location: from China, to Bangladesh and, now that it is opening up, Myanmar. Could that migration be about to end with the development of a robotic sewing machine?

There have been many attempts to automate sewing. Some processes can now be carried out autonomously: the cutting of fabric, for instance, and sometimes sewing buttons or pockets. But it is devilishly difficult to make a machine in which fabric goes in one end and finished garments, such as jeans and T-shirts, come out the other. The particularly tricky bit is stitching two pieces of material together. This involves aligning the material correctly to the sewing head, feeding it through and constantly adjusting the fabric to prevent it slipping and buckling, while all the time keeping the stitches neat and the thread at the right tension. Nimble fingers invariably prove better at this than cogs, wheels and servo motors.

“The distortion of the fabric is no longer an issue. That’s what prevented automatic sewing in the past,” says Steve Dickerson, the founder of SoftWear Automation, a textile-equipment manufacturer based in Atlanta, where Dr Dickerson was a professor at the Georgia Institute of Technology.

The company is developing machines which tackle the problems of automated sewing in a number of ways. They use cameras linked to a computer to track the stitching. Researchers have tried using machine vision before, for instance by having cameras detect the edge of a piece of fabric to work out where to stitch.

The Atlanta team, however, have greatly increased accuracy by using high-speed photography to capture up to 1,000 frames per second. These images are then manipulated by software to produce a higher level of contrast. This more vivid image allows the computer to pick out individual threads in the fabric. Instead of measuring the fabric the robotic sewing machine counts the number of threads to determine the stitching position. As a consequence, any distortion to the fabric made by each punch of the needle can be measured extremely accurately. These measurements also allow the “feed dog”, which gently pulls fabric through the machine, to make constant tiny adjustments to keep things smooth and even.


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Shoemakers are already using 3D printers, which build up material additively, to make prototypes of shoes. Exotic clothing and shoes made with 3D printers are becoming regulars on the catwalks at many of the world’s leading fashion shows, although the materials they are printed from tend to be various sorts of plastic, which can make the garments somewhat clunky and shoes a bit clog-like. However, researchers are working on ways to print more flexible materials. One such project involves a collaboration between Disney, Cornell University and Carnegie Mellon University. Their 3D printer uses layers of off-the-shelf fabric to make soft objects, such as cuddly toys.


http://www.economist.com/news/technology-quarterly/21651925-robotic-sewing-machine-could-throw-garment-workers-low-cost-countries-out?fsrc=scn/tw/te/pe/ed/madetomeasure